Karnataka High Court
Shri K P Ghanshyam vs Shri K L Swamy on 5 February, 2025
Author: K.Natarajan
Bench: K.Natarajan
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE K. NATARAJAN
MISCELLANEOUS FIRST APPEAL NO. 6815 OF 2024
BETWEEN:
SHRI K.P.GHANSHYAM
S/O LATE SHRI. K.L.A.PADMANABHASA,
AGED ABOUT 53 YEARS,
RESIDING AT NO.9/1,
SESHADRI ROAD,
GANDHINAGAR, BANGALORE,
KARNATAKA - 560 009.
...APPELLANT
(BY SRI. ARJUN RAO, ADVOCATE)
AND:
1. SHRI. K.L.SWAMY
SON OF LATE KHODAY LAKSHMANSA,
AGED ABOUT 77 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE,
KARNATAKA - 560 009.
2. SHRI. K. H. GURUNATH,
SON OF LATE K.L. SRIHARI,
AGED ABOUT 60 YEARS,
RESIDING AT PRESTIGE HERMITAGE,
BANGALORE,
KARNATAKA - 560 008.
3. SHRI. K. R. NITYANANDA,
SON OF LATE K. L. RAMACHANDRA,
AGED ABOUT 65 YEARS,
RESIDING AT NO.1,
2
KINGS HOUSE, MILLERS ROAD,
BANGALORE,
KARNATAKA - 560 052.
4. SHRI. K. R. DAYANANDA,
SON OF LATE K.L.RAMACHANDRA,
AGED ABOUT 58 YEARS,
RESIDING AT NO.1,
KINGS HOUSE,
MILLERS ROAD,
BANGALORE,
KARNATAKA - 560 052.
5. SHRI. K. H. SRINIVAS,
SON OF LATE K.L. SRIHARI,
AGED ABOUT 57 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE - 560 009.
6. SHRI. K. H. RADHESHYAM,
SON OF LATE K.L. SRIHARI,
AGED ABOUT 54 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE,
KARNATAKA - 560 009.
7. SHRI. K. S. GIRIDHAR,
SON OF SHRI. K.L. SWAMY,
AGED ABOUT 51 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE,
KARNATAKA - 560 009.
8. SHRI. K. S. BRIJMOHAN,
SON OF SHRI. K.L. SWAMY,
AGED ABOUT 48 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
3
GANDHINAGAR,
BANGALORE,
KARNATAKA - 560 009.
9. MRS. RAJALAKSHMI SRIHARI KHODAY,
WIFE OF LATE K.L. SRIHARI,
AGED ABOUT 77 YEARS,
RESIDING AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE,
KARNATAKA - 560 009.
10. LK TRUST
AN ERSTWHILE TRUST
REGISTERED UNDER THE INDIAN TRUST ACT 1882 ,
HAVING STOOD DETERMINED ON 07.06.2023,
PREVIOUSLY HAVING ITS ADDRESS AT NO.9,
SESHADRI ROAD,
GANDHINAGAR,
BANGALORE - 560 009.
REPRESENTED BY ITS TRUSTEE.
...RESPONDENTS
(BY SRI. SUDARSHAN L., ADVOCATE FOR R-1;
SMT. SWATHI SUKUMAR, ADVOCATE FOR R3 & 4;
SRI. UDAY HOLLA, SENIOR COUNSEL FOR
SRI. GURUMURTHY M., ADVOCATE FOR R2, 5, 6, 9 & PROP.
R10;
SRI. DHYAN CHINNAPPA, SENIOR COUNSEL FOR
SRI. A.S.VISHWAJITH, ADVOCATE FOR R7 & 8)
THIS MFA IS FILED U/O 43 RULE 1(r) R/W SECTION 151 OF
CPC, AGAINST THE ORDER DATED 09.05.2024 PASSED ON
I.A.NO.1 IN OS.NO.3150/2024 ON THE FILE OF THE II ADDITIONAL
CITY CIVIL JUDGE BENGALURU CCH-17, DISMISSING THE IA.NO.1
FILED UNDER ORDER 39 RULE 1 AND 2 R/W SECTION 151 OF CPC.
THIS MISCELLANEOUS FIRST APPEAL HAVING BEEN HEARD
AND RESERVED FOR ORDERS ON 31.01.2025 THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:
4
CORAM: HON'BLE MR JUSTICE K.NATARAJAN
RESERVED FOR ORDERS ON : 31.01.2025
PRONOUNCED ON : 05.02.2025
CAV JUDGMENT
This appeal is filed by the appellant/plaintiff under Order 43
Rule 1 (r) read with Section 151 of Code of Civil Procedure,1908
(CPC) for setting aside the order passed by the City Civil and
Sessions Judge, Bengaluru in O.S.No.3150/2024 dated 09.05.2024
for having rejected the application in I.A.No.1 filed under Order 39
Rule 1 and 2 of CPC and to grant injunction against the
respondent/defendants.
2. Heard the arguments of Sri.Arjun Rao, learned counsel for
the appellant and Sri.Sudarshan L, learned counsel for the
respondent No.1, Smt.Swathi Sukumar, learned counsel for
respondent Nos.3 and 4, Sri.Uday Holla, learned senior counsel for
Gurumurthy for respondent Nos.2, 5, 6, 9 and 10 and also heard
Sri.Dhyan Chinnappa, learned senior counsel for respondent Nos.7
and 8.
3. The appellant was the plaintiff and the respondents were
the defendants before the trial court. The ranks of the parties are
retained for the sake of convenience.
4. The case of the plaintiff before the trial court is that the
plaintiff filed the suit for declaration to declare the term 'LK Trust'
as expired and consequently determine as per the terms of 'Clause
18' of the Trust Deed dated 07.06.1987, with effect from
08.06.2023 and to declare that the trustees are obligated to fulfil
the terms of 'Clause 19' of the Trust Deed, to appoint the receiver
to carry on all functions of erstwhile trustees, grant decree of
enquiry into financial affairs of the trust, grant decree that pursuant
to such enquiry, the trustees who have committed breach of trust,
the defendant Nos.1 and 2, and another claiming under them have
received the legal benefits and grant mandatory injunction and
direct the defendants to furnish all original books, papers and
documents and information pertaining to the trust and pass award
and pass any other relief deemed fit and proper.
5. During the pendency of the suit, the appellant also filed
I.A.No.1 under Order 39 Rule 1 and 2 of CPC, for directing the
defendants not to create any 3rd party interest, alienate the
schedule property of the Trust. It is averred by the
appellant/plaintiff in its affidavit along with IA contending that the
plaintiff is the beneficiary of 'LK trust' which is family trust formed
by later Mahaveersa for the benefit of some of his family members
who are the beneficiaries and named therein as trustees as on
07.06.1987. The said trust deed was constituted and settled by its
founder, namely MS Mahaveersa and trustees namely K.L.Swamy,
K.L.A. Padmanabhasa, K.L.Srihari and K.L. Ramachandra. After
death of one of the trustees, K.L. Srihari, his son K.H.Gurunath is
made as trustee in the trust. In the initial stage, the trust was
constituted for a period of 18 years and subsequently it was
extended by resolution dated 11.5.2005 from 07.06.2005 till
07.06.2014 and thereafter supplementary trust deed has been
executed on 29.07.2011 by revising the individual shares of the
surviving beneficiaries of the trust to 6.66% share for the
beneficiaries except KL.Ramachandra who was allotted 6.76%
shares. Again the trust was extended for period of 9 years from
08.06.2014 to 07.06.2023 as per the resolution dated 02.06.2014.
The plaintiff claimed that the trust has been determined as on
07.06.2023 and claimed that the trust deed has not been
continued. The plaintiff made out the case that the trustees have
misappropriated the funds of the trust and the father of the plaintiff
Sri.K.L.A Padmanabhasa has filed Criminal proceedings against the
defendant for breach of trust etc., Subsequently the plaintiff came
to know that the civil suit has been filed for determination of the
trust deed and properties are not being partitioned as per the terms
of trust deed. The trust has been determined as on 7.6.2023.
Therefore, this suit has been filed to determine the trust and the
defendants are trying to alienate the properties. Hence, prayed for
restraining them from alienating the properties and not to create
any 3rd party interest, till disposal of the suit.
6. The respondent No.1 filed the statement of objection
contending that the suit itself is collusion suit and that the plaintiff
colluded with his father. The defendant No.10 who has filed
criminal case and failed to succeed in criminal case and contended
that the trust deed has been continued and as such relief is not
maintainable . It is the contention of the defendants that the
plaintiff had forged the order to get the relief and it is proxy
litigation and forum shopping. It is also contended that the plaintiff
himself signed the loan documents, there was an agreement
between the parties that the trust itself continues till clearance of
the loan of the trust. The loan of the trust is not cleared, as such
trust deed has been continued for 9 more years and it is also
contended that the trustees have resolved to extend the period of
trust for 9 years, by passing the resolution. Subsequent to the
resolution, the plaintiff himself signed the declaration along with
other beneficiaries. Such being the case, the suit itself is not
maintainable and the relief cannot be granted. Hence, prayed for
dismissing the Interlocutory Application.
7. After hearing the arguments by the trial court, the trial
court dismissed the application filed by the plaintiff. Hence, the
plaintiff is before this court.
8. Learned counsel appearing for the appellant contended
that the order of the trial court is not correct. The appellant is one
of the beneficiary under the trust, which is a family trust, it was
extended time to time and there is no extension of trust from
08.06.2023 onwards. There is a notice given to his father by one of
the trustee on 08.05.2023 and on the very next day, they fixed the
date for board meeting. The father of the plaintiff did not attend
the meeting and he has raised an objection, which was not
considered. Though the trust was started in 1987 previously for 18
years, thereafter as per 'clause 18' it has to be unanimously
determined, otherwise, they can extend it as per 'Clause 12' of the
trust deed. There was internal dispute between the trustees and
the beneficiaries, criminal cases were registered against each other.
Therefore, there is no question of continuing the trust. The trustees
are misusing the funds of the trust by showing the drawings in the
name of the dead person, who was the mother of the plaintiff who
died in 2014. They have shown withdrawal in the year 2016 and
2017, of more than lakhs of rupees, which is nothing but
misappropriation by the trustees and they are alienating the
properties of the trust. However, until the suit is disposed of, the
trustees shall be restrained from alienating the property of the
trust. They have to show their accounts, which they refused to
show. The Chartered Accountant shall be appointed which is not yet
done. Therefore, in the interest of the trust, the properties
especially immovable properties shall be protected by way of
injunction. The trial court, without proper consideration of the
documents rejected the application, which is not correct. As per the
provisions of the Trust Act 1882, the beneficiaries are entitled to
seek the accounts and know the day to day affairs of the trust and
the properties of the trust shall be protected under the Act.
Therefore, it is required to determine the trust, hence until disposal
of the suit, the property shall be protected. Hence prayed for
allowing the appeal by setting aside the order of the trial court.
9. Learned counsel also contended that the trial court also
dismissed the application on the ground that the trust was not
made as party, therefore it is necessary for the appellant to make
the trust as party in this appeal. Hence, prayed for allowing the
application.
10. Sri.Dhyan Chinnappa, learned senior counsel appearing
for the respondent Nos.7 and 8, seriously objected the appeal
contending that he has interpreted the 'Clause 12' and 'Clause 18'
of the trust deed and contended that as per 'Clause 12' of the trust
deed, the Board of trustees can extend the trial unanimously or by
voting or by circulation. In case of equal number of persons or if
there is a tie, the Managing Director can cast the vote. Such being
the case, the trustees have power to extend the trust. It is also
contended that the trust was having lot of landed properties, it had
raised the loan from the bankers and had constructed huge
apartments, and leased out to the lessees. Therefore, until clearing
the loans and clearing the lease agreements, the trust cannot be
determined or closed. If at all any violation under clause 18, the
father of the plaintiff could have filed suit for declaration for further
continuation of the trust, but he has not challenged. Whereas, the
plaintiff is only the beneficiary and he has challenged. Though he
has given notice to his father/defendant No.10, who was alive and
subsequently died, therefore, the trial court dismissed the suit on
the ground, there is a collusion between plaintiff and his father
defendant No.10 and only for the determination, the unanimous
decision should be taken but not for extension of the trust.
Therefore, the trial court considering the same, rightly rejected the
application.
11. Learned senior counsel also contended that though it is
not mentioned in the extension of the trust, in the resolution, that
the loans were created, but subsequent to the extension of the
trust, the very said plaintiff and his father, all signed the declaration
form and given to the bankers including all the beneficiaries of the
family. Therefore, the plaintiff cannot blow hot and cold at a time
and he has suppressed the material facts by signing the declaration
form, subsequently to the extension of the trust. Therefore, the
appeal cannot be maintainable, he has suppressed the facts.
Therefore, prayed for dismissal of the appeal.
12. Sri.Uday Holla, learned senior counsel appearing for the
other respondents, also contended that there is lot of landed
property at that time and there was no income. The loans were
raised and put up the apartments and leased out. Therefore, until
clearing the loans to the banks and vacating the lessees the trust
cannot be concluded or determined. Apart from that, the trial court
considering the aspect rightly dismissed the application. The trust
required to conduct day to day business by alienating or leasing out
the property, receiving rents for the purpose of improvement of the
trust and benefit of the trust. Therefore, the question of restraining
the defendants from creating any 3rd party interest cannot be
granted. Hence, prayed for dismissing the appeal.
13. Sri.Dhyan Chinnappa, learned senior counsel, for
respondent Nos.7 and 8, also contended that the trust was under
the loss, the loss of the trust was shared by all the beneficiaries,
accordingly the loan amount outstanding in the name of the mother
of the plaintiff was shown in the bracket in the balance sheet.
Subsequently, the trust was getting some income which was shared
equally as per the trust deed and the amount has been reduced.
There is no actual withdrawal of any amount, shown in the balance
sheet, it was in the bracket, shown as outstanding loan payable by
this dead person and contended that even the plaintiff cannot ask
the trust to determine or cancel the trust deed, as beneficiary and
even the trustees cannot evict or expel the beneficiary from the
trustee. Such being the case, until disposal of the suit, the plaintiff
is not entitled for any relief. Hence, prayed for dismissal of the suit.
14. Sri.Sudarshan L., learned counsel appearing for
respondent No.1, , also supported the contention of the learned
senior counsel appearing for the respondents and prayed for
dismissing the appeal.
15. Learned counsel for the appellant also contended that the
father of one Gurunath had died whose name is K.L.Srihari shown
as estate of K.L.Srihari but for the death of Smt.Gulab P Khoday,
they have not shown as estate of Smt.Gulab P Khoday. Therefore,
they have misused the accounts of the dead persons, etc., Hence
prayed for allowing the appeal by granting the injunction.
16. Having heard the arguments, and perused the records,
the point that arises for my consideration are;
(i) Whether the plaintiff/appellant made
out prima facie case in his favour?
(ii) Whether balance of convenience lies in
his favour?
(iii) Whether if injunction is not granted, he
will be put into irreparable loss and?
(iv) Whether the order of the trial court is
perverse and capricious and is liable to
be set aside?
17. On considering the entire records, it is not in dispute that
the LK Trust is a family trust, created in the year 1987, where the
plaintiff and so many family members are the beneficiaries under
the trust, which is a family trust. There were 4 founder trustees in
the beginning, including the father of the plaintiff K.L.A.
Padmanathasa. Subsequently, the trust was extended time to time
by passing resolution in the board meetings. The plaintiff's father
disputed the board meeting held on 09.05.2023 as his father was
not given proper notice and they extended for 9 years. I have
perused the documents, where a notice has been issued to his
father on 08.05.2023 where he has replied that he will not attend
and as per the meeting, they stated that the properties are leased
out. Therefore, until recovery of the trust properties, the trust is
required to be continued. However, as per the sub-clause 1 of
clause 18 it is stated that initially trust was formed for 18 years,
thereafter, it was extended from time to time and as per the sub-
clause 3 of clause 18, for the determination of the trust, it should
be unanimous. Admittedly, there was no unanimous meeting held
for the determination, therefore as per clause 12 of the trust deed,
the trust was extended for 9 years from 07.06.2023. Ofcourse they
have stated that the property was leased out, until clearing the
loan, the trust shall not be determined. However, it is shown in the
documents by the respondents that the very plaintiff also filed the
documents, that the trust properties were put up for construction by
borrowing loan from various banks and leased out to various
lessees and the very plaintiff and his father though objected the
extension of the period by his father, but all of them have signed
the declaration form and submitted to the bank.
The signature of the plaintiff, his father, apart from all the
beneficiaries was unanimously signed and sent to the bankers and
the documents were not produced by the plaintiff, along with the
plaint in the suit, even though he has given consent. On the other
hand, he has been agitated that on the extension of the period,
which was illegal and it is a clear violation of clause 18 which is not
correct. On the other hand clause 12 and 18 reads as under;
"12. The Trustees shall conduct meetings for
the purpose of administration of the Trust as and
when they find it necessary and take decisions in the
meeting including resolution by circulation. The
Managing Trustee is entitled to casting vote in case of
tie.
18. The Trust shall stand determined;
(a) at the end of 18 years from this
date; or such other extended date to be
decided upon by the Board of Trustees;
(b) on the demise of the last
surviving beneficiary; or
(c) when the Trustees unanimously
so decide to determine the trust, whichever
event is earlier but not earlier than seven
years from this date."
18. On careful perusal of clause 12 which clearly reveals, for
the purpose of extension, the trustees shall decide, even by
circulation or by voting and if there is any tie, the MD can vote.
Such being the case, the quorum of 3 trustees among 4 trustees
who decided to extend the period of trust, for 9 years. Therefore,
there is no illegality or violation of the clause 18 or 12 of the trust
deed as contended by the learned counsel for the appellant and
very appellant signed the declaration form and given to the bankers
along with the other trustees, as well as beneficiaries. Such being
the case, the plaintiff failed to show that there is a prima facie case
in his favour, and that shows the trust was illegally extended,
instead of termination, determining the trust as on meeting of
09.05.2023. Therefore the trial Court rightly held against the
plaintiff and in favour of the defendants. This court also holds that
the plaintiff failed to prove the case in his favour, to show that the
trust was extended illegally. Apart from that, he also suppressed
the fact by signing the declaration form, along with other trustees,
beneficiaries and was sent to the bankers. Thereafter, the
extension of the trust was not questioned by the father of the
plaintiff who is a trustee, whereas the plaintiff is only beneficiary
under the trust. Therefore, if the trust is extended, there is no loss
caused to him whereas so many beneficiaries are other than 3
trustees. Such being the case, if trust is continued no harm will
cause to the plaintiff's case. Therefore, there is no balance of
convenience lies in his favour.
19. That apart, the trust raised various loans in various
banks amounting to crores of rupees and constructed apartments.
Now they leased out the apartments and is getting income. Earlier
there was fully loss to the trust, now they are getting income, even
plaintiff account shows crores of credit in his account. There is no
loss in his account and if the trust is not extended, the trust is going
to suffer and there is debt payable by the trustees to the bankers
and if the trust is determined, at this stage, definitely there will be
huge loss to the trust as well as trustees, apart from the loss
caused to more number of beneficiaries. Therefore, if the injunction
is not guaranteed, plaintiff will not incur any loss wherein, if
injunction is granted, the trustees and the beneficiaries will be put
into loss and the there will be multiplication of litigation. The
bankers will recall the loans, they will take action, attach the
property of the trust and sell out through public auction that will
cause irreparable loss to the trust. Therefore, considering the
aspect that no irreparable loss would be caused to the plaintiff, if
the injunction is not granted.
20. Ofcourse the properties of the trust is required to be
protected, as per the Trust Act. However, the trust is acting on
behalf of all the beneficiaries, it is a family trust. There were
criminal cases filed against petitioner by respondent. Though they
have filed case against the other trustees 'B final report' was filed
by the police whereas it is alleged that the appellant has
misappropriated Rs.17 crores in the business, the investigation is
going on. His bail application came to be rejected by the court and
he is facing the investigation. Such being the case, at this stage, if
the injunction is granted, it will lead to multiplicity of litigation and
irreparable loss caused to all the beneficiaries of the trust.
21. The trial court after considering various aspects rightly
dismissed the application. Learned senior counsel for the
respondent relied upon the judgment reported in (1994) 1 SCC in
case of S.P. Chengalvaraya Naidu (dead) by LRs Vs Jagannath
(dead) by Lrs & ors wherein the Hon'ble Apex Court has held that
even the court can reject the plaint, dismiss the suit on the
preliminary stage itself, when the fraud is committed by
suppressing material fact. It is well settled by Hon'ble Supreme
Court in catena of decisions, when the plaintiff approaches the
court, he should come with clean hands and should not
misrepresent. Therefore, in view of the judgment of Hon'ble
Supreme Court, I am of the view that the trial court rightly
considered the application and dismissed and there is no capricious
or no perversity in the Order, in order to reverse the same by this
court. Therefore, by looking to the facts and circumstances, I am of
the view, the appeal filed by the appellant is devoid of merits and is
liable to be dismissed.
Accordingly it is hereby dismissed.
Sd/-
(K.NATARAJAN)
JUDGE
AKV
CT:SK
